CBP Turns Up the Heat, Moves Forward with Increased Audits and Enforcement Actions
To accomplish this objective, CBP Regulatory Audit has started to deviate from its traditional audit program, the Focused Assessment, and intends to conduct more audit surveys and comprehensive audits in lieu of Focused Assessments.
As a new CBP Regulatory Audit procedure, CBP has been issuing “informed compliance notifications” to importers via email, telephone calls, and in writing. The emails and phone calls can be brief and benign sounding in nature, but in many cases will lead to an audit. However, should an importer receive a letter, this means that in addition to being subject to an audit, CBP considers the recipient an enforcement target despite the letter’s stated purpose of “assisting” the company “in taking steps to ensure future compliance.”
What Does Receiving an ‘Informed Compliance Notification’ Mean?
According to a CBP Regulatory Audit official, if a company receives a notification via email or telephone call, that means that the company is a candidate for an audit survey, which is indicative of the traditional Quick Response Audit or Focused Assessment. However, if the company receives the aforementioned “informed compliance notification” letter, this means that CBP is “strongly considering” the company for a comprehensive audit.
The CBP official also indicated that these letters should be taken very seriously, and any company receiving such a letter should conduct a self-review and consider a prior disclosure because it is likely that CBP believes they have identified specific problems with the company’s imports. It is possible that the next communication from CBP, the communication indicating that the company has been selected for a comprehensive audit, will contain language indicating that the company is under investigation, thereby precluding a prior disclosure at that point.
Prior Disclosures ‘Encouraged’; Penalties Threatened
Through these letters, CBP’s goal is to encourage more prior disclosures to avoid or mitigate penalties, and in situations where no prior disclosure is submitted, to issue more penalties than they have traditionally done in the Focused Assessment environment. The letters go on to advise that while importers are not required to make a prior disclosure, they may “elect” to submit a disclosure. The letters also note that because the company has been provided this information, “violations that may occur in the future could result in seizure and forfeiture of imported merchandise and/or the assessment of monetary penalties.”